2020 (1) TMI 526 - AT - Central Excise

CENVAT Credit - capital goods - Welding Electrodes used for repair and maintenance of machinery in the factory - period from July 2007 to December 2011 - HELD THAT - The issue is no more res integra. The Tribunal in appellant s own case in ULTRATECH CEMENT LTD VERSUS CCCE ST, GUNTUR, CCE ST, TIRUPATI (VICE-VERSA) 2019 (2) TMI 405 - CESTAT HYDERABAD has allowed the assessee s appeal by relying upon the decision of the Hon ble Apex Court in the case of RAMALA SAHKARI CHINI MILLS LTD. VERSUS COMMISSIONER CENTRAL EXCISE, MEERUT-I 2016 (2) TMI 902 - SUPREME COURT . It was held that the welding electrodes used in the maintenance of machines are eligible for CENVAT credit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat Credit on Welding Electrodes used for repair and maintenance of machinery in the factory.

Analysis:
The case involved a dispute regarding the denial of Cenvat Credit on Welding Electrodes used for repair and maintenance of machinery in the factory. The appellant, engaged in manufacturing cement, claimed that Welding Electrodes were essential for repairing damaged machinery exposed to high temperatures during the manufacturing process. The department objected to the Cenvat credit availed by the appellant, citing that Welding Electrodes did not qualify as capital goods under the Cenvat Credit Rules, 2004. A show cause notice was issued seeking recovery of the Cenvat Credit amount along with interest and penalty. The adjudicating authority disallowed the credit, and the Commissioner(Appeals) upheld the decision, leading to the appeal before the Tribunal.

The appellant argued that Welding Electrodes were integral to the manufacturing process, as without them, the machinery repairs would halt production. The appellant cited several cases where Cenvat credit on Welding Electrodes used for repair and maintenance was allowed. However, the authorized representative for the respondent department referred to a Bombay High Court judgment stating that materials used for repairs and maintenance of capital goods could not be considered inputs under the Cenvat Credit Rules, 2004. The representative also mentioned a pending issue before the Supreme Court related to the matter.

The Tribunal noted that in a previous case involving the appellant, Cenvat credit on Welding Electrodes was allowed, relying on a Supreme Court decision. The Tribunal emphasized that the Supreme Court's interpretation of the term 'inputs include' applied to the present case, leading to the setting aside of the impugned orders. The Tribunal found that the judgments referenced by the department were not apprised of the relevant Supreme Court decision. Consequently, the Tribunal allowed the appeal of the assessee and rejected the appeal of the revenue, as the facts were covered by the previous Tribunal decision.

In conclusion, the Tribunal set aside the impugned orders, allowing the appeal filed by the appellant with consequential benefits.